Archive for the 'Chattanooga Market Conditions' Category
Bernanke Stirs Up Inflation Fears
Categories: Chattanooga Market Conditions, Chattanooga Real Estate News, Mortgage and Finance
By Angel Sherlin
Usually the monthly Employment report is the main event of the week, but Fed Chief Bernanke stole the show. Following the theme of other Fed officials in recent weeks, Bernanke focused on inflation risks in multiple speeches, and his comments were unexpectedly direct. According to him, inflation expectations are a “significant concern.” He explained that the decline in the value of the dollar and the increase in the cost of energy were adding to inflationary pressures. Inflation is negative for mortgage investors, and mortgage rates rose for the fourth straight week due to increased concern.
At the end of a volatile week, investors were closely watching Friday’s important Employment report. The headline number came in right on target, with a loss of -49K jobs in May. The big surprise came from the change in the Unemployment Rate. Expected to rise slightly to 5.1% from 5.0% in April, it instead jumped to 5.5%, the highest level since October 2004. Economists attributed the spike to an unusually large influx of young adults entering the labor force to find summer jobs, so the reaction in the mortgage market was modest.
ALSO NOTABLE:
* In May, the Unemployment Rate showed the largest monthly increase since February 1986
* The Bank of England and the European Central Bank both held rates steady
* The Fed’s Lacker suggested that the programs put in place to ease the credit crunch may encourage excessive risk taking
* Oil prices declined as low as $122 per barrel, but then rose again to record levels near $135 per barrel
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Fed Minutes Reveal Growth Concerns
Categories: Chattanooga Market Conditions, Chattanooga Real Estate News, Mortgage and Finance
By Angel Sherlin of Greater Chattanooga Lending, Guest Mortgage Author
While there were no quiet days in the mortgage market during the week, the enormous swings in rates seen recently were absent. The sparse economic news did little to change the outlook for future economic growth and inflation, and the net result of a series of medium sized daily rate movements was a slight drop in mortgage rates for the week.
The most notable economic news during the week was the release of the minutes from the March 18 Fed meeting. According to the minutes, the three quarters point rate cut was made to help avoid a worse than expected downturn in economic growth. The Fed forecasted that rate cuts and government stimulus packages will lead to faster economic growth during the second half of the year. Falling home prices and turmoil in financial markets were cited as the two most significant reasons for the slowdown. Two of the ten voting Fed officials wanted a smaller rate cut due to inflation concerns. Investors are now evenly split between an additional quarter point or half point rate cut at the next meeting on April 30.
In the housing sector, the February Pending Home Sales index fell a little more than the expected from January, and the index was down -21% from one year ago. Pending Home Sales are a leading indicator of future housing market activity, so the next Existing and New Home Sales reports may show small declines. The National Association of Realtors (NAR) latest forecast predicted that conditions will remain flat for the next few months, but that activity will pick up during the second half of the year. The Chief Economist of the NAR expects that higher mortgage loan limits will lead to increased sales later in the year.
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Our Local Real Estate Market: The Good, The Bad and the Ugly!
Categories: Chattanooga Market Conditions, Chattanooga Market Statistics, Chattanooga Real Estate News
By Andy Hodes, Realtor, Andy Hodes & The Scenic City Team
Recent statistics from the Chattanooga Multiple Listing Service (MLS) continues to show weaker sales and median home values clearly pointing to the fact that we continue to operate in a “buyer’s market” where pricing and terms are much more favorable to buyers than sellers. A buyer’s market is typically defined as having more than seven months of inventory available.
In February 468 housing units closed, a 15.2% decline from the 552 units that closed in February 2007. In the last six months (September 2007 thru February 2008) we averaged 481 closed units a month, a 21% decline from the average of 609 monthly closed units for all of 2007. It was reported that from January 2007 the median home price (the amount at which half the homes sold for more and half sold for less) slipped from $135,700 to $127,000 at the end of January 2008, a 6.4% decrease. These statistics were reported by the Chattanooga MLS.
In Chattanooga affordability is key with our median price of $127,000 being significantly less than the national median home price of $201,100, as reported by the National Association of Realtors.
Even though our median values slipped during 2007, my primary concern is the imbalance of supply and demand. At the end of February the MLS showed 5,593 active listings on the MLS. Using 481 as the average number of closed transactions for the last six months, that’s 11.6 months of housing inventory if no new homes were listed for sale. In February 2008, the MLS reported that over 1,100 homes were newly listed for sale. This imbalance will not correct in the near future even if buyer transactions return to 2006 and early 2007 levels.
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Investors Push Up Mortgage Rates
Categories: Chattanooga Market Conditions, Mortgage and Finance
By Angel Sherlin of Greator Chattanooga Lending, Guest Mortgage Author
In a week packed with major economic news, the biggest story for mortgage markets was the widening spread between mortgage backed securities and Treasury bonds. Issued by the US government, Treasury bonds are generally considered to be the benchmark for a “safe” security, since the risk of default is extremely low. During the week, the economic news was mixed, and Treasury rates barely changed. Mortgage rates, however, jumped by about half a point. Investors are demanding a higher return from mortgage backed securities, and the result is higher mortgage rates. In another unusual reversal, the mortgage market has been more volatile than the Treasury market, and wide swings in mortgage rates have become a daily occurrence.
On the economic front, the highly anticipated Employment report failed to meet even Wall Street’s reduced forecast. 
Against expectations for a gain of 25K new jobs, the economy lost -63K jobs in February, and the figures for January and December were revised lower as well. This marked the largest monthly decline since March 2003. The Unemployment Rate surprisingly fell to 4.8%, but that reflects a large number of people who stopped looking for a job last month, meaning that they officially left the labor pool. Once again, the manufacturing and construction sectors showed the greatest weakness. Until November, the service sector had been steadily producing job gains of 100K or more per month, but even that sector barely produced any new jobs in February.
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Attention Buyers! Dream Home or Nightmare? How a Great Realtor is a KEY Player on Your Team.
Categories: Ask Andy, Chattanooga Market Conditions, Chattanooga Real Estate News, First Time Buyers, For Home Buyers
- By Kacey Sides, Realtor, Buyer Specialist with Andy Hodes & The Scenic City Team
Ready to buy a home? Whether it’s your first or your fifth, each experience can be a little different, so hiring the right Realtor can eliminate potential nightmares in finding and purchasing your dream home - especially when buying a home is not something you do everyday.
Here in Chattanooga, it’s definately a buyer’s market and you see multiple for sale signs in just about every neighborhood. Not only do those signs advertise the home for sale, they also show that the seller hired a Realtor to represent them, market their home and ultimately maximize their bottom line. Buyers, did you know that you can hire a Realtor to represent you in your home search? It’s a smart move that will put you on a level playing field with the seller and their agent.
A great Realtor will provide expert assistance to help you find a great house at a great price using these proven tools:
1. The Home Buyer Consultation - During the consultation your Realtor will talk with you to understand what you need and want in your new home. He or she will fully explain and guide you through every step of the home buying process.
2. The Mortgage Pre-approval - If you need a loan to purchase your next home, it’s essential to nail down those details up front. Unless you have an established relationship, your Realtor will get you to a reputable lender than can (1) evaluate your credit profile, (2) help you find a loan that best meets your needs, (3) determine your price range and (4) issue a pre-approval letter. A pre-approval letter shows sellers that you have a loan ready-to-go giving you a potential upper hand in the negotiations.
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Flip or Flop: 5 Ways To Become A Solid Real Estate Investor
Categories: Chattanooga Market Conditions, Chattanooga Real Estate Investing, First Time Buyers, For Home Buyers
“Flipping Houses,” the new nickname for Real Estate Investing, has spread like wildfire over the nation. Before the market took a drastic downturn in most areas, and a slight downturn here in the Chattanooga market, pretty much anyone could jump on the house flipping bandwagon and make a good chunk of change. Now with the new market conditions, it is important to have a strategy in place or you could lose your shirt!
Following these 5 simple steps can make your next “Flip” a profitable one…
1. Know The Market! If you know what homes are selling for in the area, it’s easy to pick out a good deal from a bad one. It is important to what’s sold and what hasn’t and why. Gaining access to accurate information about the details in the homes that have sold is key. Finding a Realtor to represent you in your search can give you the access you need to the comparable home sales and keep your finger on the pulse of the market in your area.
2. Get an Inspection! A reputable home inspector can be priceless when buying investment properties. While no home inspector is perfect, they are trained to look for red flags in a home, and are up to date on the current building codes in the area, which most people are unaware of. Missing these potential issues can costs you thousands, so spending a few hundred dollars on an inspector makes dollars & sense!
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